[24WashIntlLJ0315] Substance Overload: A Comparative Examination of Japanese Corporate Governance Law Through the Lens of the Daiwa Bank Case

Abstract:

A. Reid Monroe-Sheridan, Registered Foreign Attorney in Japan (New York-licensed), Monroe-Sheridan Foreign Law
Office; Adjunct Lecturer, University of Tokyo Law School.
Abstract: Japanese corporate governance law is facing a period of remarkable
change. In light of Prime Minister Shinzo Abe’s push for corporate governance reforms
and the explosive news of Olympus Corporation’s $1.7 billion accounting scandal in
2011, academics and practitioners alike are devoting renewed attention to the rules that
govern Japan’s boardrooms. This increased focus brings to the fore two key questions
about Japan’s modern corporate governance principles: how have they evolved and how
are they applied in practice? To answer these questions, this article revisits the Daiwa
Bank case, one of Japan’s most stunning business scandals. This international criminal
conspiracy resulted in one of the world’s largest banks being banned from operating in
the United States and gave rise to a seminal Japanese judicial opinion that found a single
bank director personally liable to his employer for over $500 million. By examining the
law and legacy of the Daiwa Bank scandal and subsequent developments in Japanese
statutory and case law, both on their own terms and in light of their analogues in
Delaware, this article seeks to shed light on and critically evaluate the evolution and
application of certain major Japanese corporate governance principles.

Description:

Washington International Law Journal, Volume 24, Number 2, January 2015